A clean energy system that reduces pollution will heighten the demand for critical minerals used in new technologies such as photovoltaic panels, wind turbines, and electric car batteries. By 2040, depending on emission reduction developments, global demand could rise four to six times from today. This makes careful planning essential to guarantee supply and the success of the energy transition.
This finding comes from the report Energy transition and critical minerals, prepared by Professor Mariano Marzo and published by the Naturgy Foundation.
The document notes that demand is persistent and set to grow: critical minerals accounted for 11 percent of the total value of energy raw material trade in 2019, with a projection to 47 percent by 2050, while fossil fuels are expected to fall from 89 percent to 18 percent in the same horizon. These figures underscore a structural shift in global trade patterns tied to decarbonization, and they reinforce the need for resilient supply chains.
Marzo emphasizes the challenge of securing reliable supply chains for these minerals and the products derived from them. Without safe and resilient systems, energy transitions could be slower and more costly than forecast.
Since 2010, as renewable energy adoption has grown, the average minerals input per unit of electricity production capacity has increased by about 50 percent, reflecting the material intensity of modern low carbon technologies.
Solar energy requires specific minerals for panels, a factor illustrated by industry observers.
For example, an electric car uses roughly six times more mineral raw materials than a conventional car with an internal combustion engine, and a wind farm needs about nine times more minerals than a natural gas combined cycle plant.
Key elements for renewable energy
Minerals such as lithium, nickel, cobalt, manganese, and graphite are essential for the performance, longevity, and energy density of batteries. Rare earth elements are vital for wind turbines and electric vehicle motors. Copper and aluminum are crucial for electrical networks. These examples show the new dependency that decarbonization can create. Marzo points to managing environmental, economic, social and geopolitical impacts across the entire value chain, from mining and processing to final recycling. It is a substantial challenge.
Within the energy trilemma, securing supply throughout the value chain will be critical. The professor notes that current energy security mechanisms are designed to respond quickly to disruptions in hydrocarbon supply or price spikes, and he warns that concerns about price volatility and supply security will persist in an electric system powered by renewables.
These raw materials represent a significant factor in the cost structure of many technologies. Doubling lithium or nickel prices could raise battery costs by about 6 percent. If both prices doubled simultaneously, the savings from higher production could be wiped out by higher material costs. This insight highlights the linkage between material markets and technology economics.
Gradual and inadequate action
The reality is that global plans for supply and investment in critical minerals are insufficient to mitigate climate change effectively. The professor argues that current efforts do not drive an accelerated energy transition and contain vulnerabilities that could raise tensions and price swings in markets.
Weak points include a high geographic concentration of production and processing, long lead times for new mining projects, and resource quality declines. Increased environmental and social scrutiny for companies and growing exposure to climate risks further complicate the landscape.
In the race for leadership in the energy transition, states compete for control of supply chains for low carbon technologies. It is clear that China leads in this competition and holds potential influence over the geopolitics of critical mineral supply chains and related technologies. This dynamic could shape a new global energy order in the face of current climate pressures.
In March discussions on strengthening the security of supply for critical minerals gained prominence. The energy transition is viewed as a strategic objective for the European Union and its member states. The emphasis is on investing in new sources of supply, promoting technological innovation at every point of the value chain, scaling up recycling, improving resilience and market transparency, adopting stronger environmental, social and governance standards, and boosting international cooperation between producers and consumers.
Reference article: Naturgy Foundation report on the sixfold increase in critical mineral demand to meet decarbonization goals.
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